The FCA and PRA have now finalised the first phase of their reforms to the Senior Managers and Certification Regime. The FCA's policy statement, PS26/6, was published in April 2026, and the changes took effect in three stages: April, July and September 2026. The PRA published parallel rules for dual-regulated firms. A second phase, which depends on legislative change by HM Treasury, is still to come.
The reforms are being presented as a reduction in burden, and in administrative terms that is fair. What they do not do is dilute individual accountability. Firms that treat the changes as permission to step back from SM&CR are likely to find that the regulators see it differently.
What has changed
The most practical changes concern process and timing:
- Criminal records checks are now valid for six months rather than three, and are no longer needed for internal or intra-group moves.
- The 12-week rule now gives firms 12 weeks to submit an application for someone covering a Senior Manager Function, rather than to obtain approval. The individual can remain in post while the regulator decides.
- Statements of Responsibilities and Management Responsibilities Maps can be submitted to the regulator in batches up to every six months, although internal versions must still be updated promptly.
- Certification can be evidenced digitally, built into annual appraisals, and re-certification can be proportionate where nothing material has changed. Duplicate certifications, around 15 per cent of certified roles, were removed from July 2026.
- Most Directory updates now have 20 working days rather than seven. Leaver reports stay at seven.
- Regulatory references are expected within four weeks rather than six, and must not include adverse information based on unproven allegations where an investigation is incomplete.
- The thresholds for Enhanced firms have increased and will be uprated for inflation every five years.
There is also new flexibility over Prescribed Responsibilities, which can now be split between Senior Managers in some circumstances and allocated more flexibly to fit a firm's actual structure.
What has not changed
The duty of responsibility remains. Senior Managers are still accountable for the areas allocated to them and must still take reasonable steps to prevent breaches. The Conduct Rules still apply, and the FCA's work on non-financial misconduct has, if anything, raised expectations about how firms handle conduct breaches. Changes aligned with that work came into force on 1 September 2026.
Flexibility also brings a governance risk. Splitting a Prescribed Responsibility between two people can be sensible, but it can also create the ambiguity SM&CR was designed to remove. If two Senior Managers each believe the other is responsible for a control failure, the regime has not worked.
What firms should update
Most firms need to update their SM&CR procedures, the 12-week tracking process, breach escalation routes, certification approach and regulatory reference process. Firms close to the Enhanced thresholds should check whether their status has changed. Any reallocation of Prescribed Responsibilities should be documented with a clear rationale and reflected in the Management Responsibilities Map before it is relied on.
What internal audit should test
SM&CR is often audited as a compliance process: are the forms filed and the certificates issued? The more valuable question is whether accountability works in practice. A useful review in the next audit cycle would test whether Statements of Responsibilities reflect what Senior Managers actually do, whether handovers have been managed properly, whether reasonable steps are evidenced, and whether the new flexibilities have been used with proper governance. The changes are a natural point to ask whether the firm's accountability framework still matches its organisation chart.
Getting specialist support
We support firms with SM&CR reviews, accountability mapping and independent assurance over conduct and governance frameworks. If you want an independent view on whether your framework reflects the reforms and still holds up, we are happy to have a conversation.
